LDN - Business

S&P 500, Dow futures muted; inflation data, lenders' earnings in focus

[January 10, 2024] (Reuters) - Futures tracking the benchmark S&P 500 and the blue-chip Dow were subdued on Wednesday as traders braced for key inflation reports and earnings from major lenders later in the week, while a dip in Treasury yields aided gains in the tech-laden Nasdaq.

Equities have remained range-bound since the turn of the year, as investors took a step back to assess the timing and pace of the monetary policy path after contrasting economic data and mixed signals from the Federal Reserve officials.

Optimism surrounding interest rate cuts had driven much of the rally towards the end of 2023.

Megacaps stocks have, however, gyrated so far in 2024, after last year's strong gains, ahead of the earnings season.

On Wednesday, Amazon.com, Tesla, Nvidia and Advanced Micro Devices added between 0.5% and 1% in premarket trading, as yields on U.S. Treasury notes ticked lower, with those on the benchmark 10-year note slipping to 3.98%. [US/]

Gains in chipmakers were also helped as TSMC, the world's largest contract chipmaker, beat analysts' Q4 revenue expectations.

A slew of government and corporate bond issuance are due this week.

Investors' focus remains squarely on the December consumer and producer inflation reports due on Thursday and Friday, respectively, as they could help determine the Fed's policy path.

Market participants have scaled back expectations for at least a 25 basis point cut in March, and currently see a 63% chance, down from around 86% in the last week of 2023, as per the CME FedWatch Tool.

"The market remains susceptible to fears that it may have priced in too many Fed rate cuts this year and also to nervousness that earnings season may not produce the results that justify the run up in stock valuations into the end of last year," analysts at Rabobank wrote.

[to top of second column]

People walk around the Financial District near the New York Stock Exchange (NYSE) in New York, U.S., December 29, 2023. REUTERS/Eduardo Munoz/File Photo

On Friday, banking giants JPMorgan Chase and Bank of America are expected to report lower profits for the fourth quarter, as they set money aside to cover souring loans and also payed more to depositors.

At 5:31 a.m. ET, Dow e-minis were down 20 points, or 0.05%, S&P 500 e-minis were up 3.25 points, or 0.07%, and Nasdaq 100 e-minis were up 39.5 points, or 0.23%.

Crypto stocks including Coinbase, Bitfarms and Riot Platforms fell between 1.1% and 2.3%, as prices of the world's most valued cryptocurrency, Bitcoin, dipped after the U.S. securities regulator said a fake social media message was posted on its account regarding the eagerly awaited approval of exchange traded funds (ETFs).

Boeing inched up 0.3%, recovering from a 9% tumble in the last two sessions. CEO Dave Calhoun acknowledged errors by the U.S. planemaker as more than 170 jets remained grounded for a fourth day.

Dow Inc slipped 0.8% after Deutsche Bank downgraded the chemicals firm to "hold" from "buy".

Later during the session, markets will parse remarks by New York Fed President John Williams.

(Reporting by Johann M Cherian in Bengaluru; Editing by Shinjini Ganguli)

Back to top